getting away from the finders fee
what should i do????
as an independent marketer i networked with real estate broker that gave me leads. they wanted to share in my finders fee. now that i know more that the broker gets paid from the seller. why should i continue with these guys that charge the seller and the buyer for wholesale deals . is this practice acceptable in re wholesaling?? or should i just go and find new brokers that just charge the seller????
Can you explain better what you are dong?
they wanted to share in my finders fee.
What do you mean by that? Who is paying you a finders fee? it is generally illegal to accept finders fees and probably illegal for the broker too.
My guess is you are confusing terms. You are probably dealing with agents not the broker. This is not an important distinction for your situation but you should know the difference. Also I suspect you are using the term finders fee instead of assignment fee.
How are you structuring your deals?
hello @NEDcarey
the way wholesalers do to get the edge they give finders fees for leads that close deals. As a scout i deal with other guys that look for deals also. sometimes we share the finders fees but now they have brokers that want to get finders fees as well. What i know now is that a broker gets paid from the seller. not from the buyer. i have brokers sending me stuff that has a commission for the buyer(buyers are paying too) they want a deal so bad they will pay
Now that i'm using my money. i'm looking at more cheaper options like going to a broker that wants to sell for their client.
Actually in my experience it's the other way around, if even that. I will absolutely never pay a finders fee for referring a cash buyer of mine to an agent or another persons property. Also, I won't expect a finders fee from the agent either. I get my "finders fee" (wholesale fee) from the person I'm reselling the deal to. If the guy asks for a finders fee and you never agreed to one in the first place, let him know that's not how you do business.
Actually I just noticed you said the broker scouts for you..of course you should pay something. To be honest, It's none of your business what the broker makes or how the broker uses his creativity to maximize revenue on a deal. If it wasn't for the broker, you would not have had the deal. But it could also depend on if you have exclusive first access to the deal or not. This business is about relationships and you might not wanna screw this one up all because of a relatively small finders fee.
Originally posted by @Chris Bell:hello @NEDcarey
the way wholesalers do to get the edge they give finders fees for leads that close deals. As a scout i deal with other guys that look for deals also. sometimes we share the finders fees but now they have brokers that want to get finders fees as well. What i know now is that a broker gets paid from the seller. not from the buyer. i have brokers sending me stuff that has a commission for the buyer(buyers are paying too) they want a deal so bad they will pay
Now that i'm using my money. i'm looking at more cheaper options like going to a broker that wants to sell for their client.
Firstly in most states it is illegal to accept a fee for putting together a buyer and seller without a license. If you do not have a license it is not illegal for you to pay one, but it is illegal for the other party to accept the fee.
If you are assigning a contract or double closing on a property, that would not normally be called a finders fee. A finders fee is generally used when you do not have a contract for the property and you are getting a fee for passing a good deal along.
You are using the term "broker" a lot. Most agents are not brokers. the broker is the head person in an agency and the agents work for the broker. Technically all agreements are with the broker and the agent is acting for the broker.
An agent cannot accept a fee unless it goes through the broker the agent works for. Generally that would mean you would have a listing or buyers agreement with that brokerage.
And agent cannot pay a fee to anyone other than a broker, (or agent via the broker).
The agent/broker only gets paid by the seller if they have a listing agreement. Agents/brokers can represent either buyers or sellers, but generally not both in the same transaction. Often a buyers agent will get 1/2 of the commission paid by the seller to the sellers agent. However if the seller is not paying a commission, (an unlisted property for example) the buyers agent agreement will say the buyer is responsible to pay the buyers agent commission.
Depending on the leads the agents is sending you, he or she may not be getting anything from the seller. Expired listings would be an example.
I post the above to clarify for you or anyone else reading along. Now to answer your question; I would not pay both a deal finder/bird dog and an agent for a listed property. Why do you need the bird dog, just work directly with an agent yourself.
I hope this help clarify it for you. I am still confused as to exactly what you are doing and whether it is even legal. Don't worry, I don't need to know as long as you know what you are doing.
finders fees are legal if the property is not listed. its competition out here and us investors will pay to get the inside scoop. example guy is thinking about selling his property. he tells his friend . his friend tells the investor . the investor make a deal and buys the property. the investor gives the friend a finders fee. what was that . is that illegal .
thanks ned
@Chris Bell Most states consider receiving a finders fee to be acting as a broker without a license. The NY law is written in a tough to read way, but I think it is clear that does not allow "finders Fees"
http://www.dos.ny.gov/licensing/lawbooks/RE-Law.pd...
Chris I totally get what you are doing, and the reasons to do it. Lots of people do it. That doesn't make it legal. Lots of people break the speed limit too. That doesn't mean speeding is legal. If you choose to do so you should be aware of the possible consequences.
great point @nedcarey
thanks for the info i will read the rules and regs and get a better understanding of what i'm doing. really getting a lot out of BP.